Lecture Notes for ECON 306 - INTERMED MICROECON THRY with Coughlin at Maryland (UMD)

Notes Information

Material Type:Review Sheet
University:University of Maryland
Term:Fall 2009
  • Price Leader
  • Complements
  • Substitutes
  • Preferences
  • Opportunity
  • Cooperation
  • Impossibility
  • Indifferent
  • Individuals
  • (to/for) Him/it
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Exogenous Variables: are determined by factors not discussed in the model (far apartments) Endogenous Variables: are determined by forces within the model (close apartments) Optimization principle: people try to choose the best patterns of consumption they can afford Equilibrium principle: prices adjust until the amount that people demand of something is equal to the amount that is supplied Reservation Price: the highest price that a person is will accept and still purchase the good, the point where they’re indifferent Competitive Market: many independent landlords, each out to sell apts at the highest price possible. It’s Pareto Efficient. Effect of Creating Condominiums: equilibrium price is unchanged because demand and supply both shift left by the same amount Effect of Tax on apts: equilibrium price P* remains unchanged because supply curve and demand curve remain unchanged. Landlords bare the brunt of the tax themselves. Effect of Rent Control: if max price is set to less than P* there will be excess...

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